Feb 10, 2023
SEC Commissioner Blasts Agency Over Shutdown of Crypto Exchange Kraken’s Staking Program
The US Securities and Exchange Commission (SEC) has recently come under fire from one of its own commissioners, Hester Pierce, over the shutdown of the crypto exchange Kraken’s crypto staking program in the United States. In a statement titled “Kraken Down”, Pierce rebuked the SEC’s regulatory approach, suggesting it was “not an efficient or fair way of regulating” the emerging web3 space.
The SEC’s enforcement action has been met with criticism from industry leaders, including Coinbase CEO and co-founder Brian Armstrong. Armstrong argued that the regulator’s requirement for businesses to register their staking services is “disingenuous”, as there is no clear path to registration.
The SEC’s settlement with Kraken, announced on Feb. 9, included a $30 million penalty for failing to register its crypto asset staking-as-a-service program. Kraken had been offering staking services to U.S. customers, but the regulator’s decision has now permanently banned the exchange from providing such services to U.S. residents.
Commissioner Pierce has been a vocal advocate for the crypto industry during her time at the SEC. In April 2021, she proposed a “safe harbor” for token projects, which would provide a three-year grace period for network developers to be exempt from SEC legal action.
The SEC’s enforcement action against Kraken’s staking program has sparked a debate over the regulator’s approach to the web3 space. While some argue that the SEC’s enforcement is necessary to protect investors, others believe that it is an overly-restrictive approach that stifles innovation.
The SEC’s decision to shut down Kraken’s staking program has also raised questions about the future of NFT marketing and promotion. With the SEC’s current stance on crypto-related activities, it is unclear whether companies will be able to engage in NFT marketing activities such as Twitter NFT marketing, or whether they will need to seek approval from the regulator before engaging in such activities.
The SEC’s enforcement action against Kraken has also highlighted the need for a more comprehensive regulatory framework for the web3 space. With the growth of the NFT industry, there is an increasing demand for web3 agencies and NFT marketing agencies that specialize in helping companies sell NFTs and promote their products.
The SEC’s decision to shut down Kraken’s staking program has sparked a debate over the regulator’s approach to the web3 space, and the need for a more comprehensive regulatory framework for the industry. With the growth of the NFT industry, companies are increasingly looking for web3 agencies and NFT marketing agencies to help them promote their products and sell NFTs. It remains to be seen whether the SEC will adopt a more flexible approach to regulating the web3 space in the future.
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